Home Technology CBO debt projections – Too optimistic or too pessimistic

CBO debt projections – Too optimistic or too pessimistic


The Congressional Budget Office (CBO), which projects the federal budget each year, makes projections about what it will look like. This includes what the government’s debt and annual deficits will look like. CBO projections are not forecasts. They aim to predict what will happen in the next 10 years, assuming that no laws change (which is obviously unrealistic). Nevertheless, Hanno Lustig examines the US federal debt and deficit relative to CBO projections.

CBO project debts higher than actual between 1985 and 2000 in terms of debt to GDP ratios. However, the debt projections for 2000 were actually lower than anticipated.

Each year, the data on surpluses was fairly similar. Between 1985 and 2000, actual surpluses were greater than CBO projections. The actual government surpluses after 2000 were significantly lower than CBO project projections. While the COVID stimul funds will be responsible for the 2020 downswing, the trend is pretty consistent even without it.

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